Stock markets seem to be waiting for general elections

When the markets do not know which way to go, they go both ways, sometimes up, sometimes down, but there are times when they just stay put, waiting for Godot. Right now they seem to be waiting for elections, general elections, that is.

When the markets do not know which way to go, they go both ways, sometimes up, sometimes down, but there are times when they just stay put, waiting for Godot.

Right now they seem to be waiting for elections, general elections, that is, but the strange goings-on first in Srinagar and now in Hyderabad seem to have upset their applecart.

If the ruling party is really as desperate as all that, the marketmen seem to be arguing, the election results can hardly be taken for granted, and the country may be in for a long period of uncertainty. The market is prey to all kinds of fears but uncertainty is the worst of them and it is usually a signal for the bears to swoop down for the kill.

This is not happening right now - it takes time for the reality to sink in - and may not happen at all. But the market has not been in good shape lately and is worried about many things including, of course, inflation. Prices have been rising since April at the rate of roughly 1 per cent a month which takes you well beyond the other side of the two-digit mark.

Many commodities - edible oils and sugar, for instance - have risen much faster and are still going up. Ultimately it all adds up and the share prices start slithering down before you can say Dalal Street.

August was rather a dull month with very few corporate reports coming in, apart from Indian Rayon, which seems to have done rather poorly but has maintained the dividend. Indian Organic have turned market favourites on reports that the company is doing exceedingly well in the current year following the opening of its polyester fibre unit at Manali.

Mysore Cement has also done well though this is not reflected in its profits. Most cement company shares have ruled quiet as the boom seems to be over and prices are under pressure.

It is only a matter of time before the market price touches the levy price, which may not be bad for the consumer but not all that good for the shareholder.

The average shareholder can hardly complain that he has not had a good deal over the years. You only have to look at prices of seven years ago to see what a sea change has come over the market.

Associated Cement was 110 in August 1977; it is now over 350. Hindustan Lever has more than doubled from 24 to 50, Larsen & Toubro even more so from 33 to 75.

Mahindra & Mahindra has gone up nearly sevenfold from 11 to 75 and Premier Automobiles also by the same margin from 40 to 290. Tata Steel is up four times (from 80 to 320) and Brooke Bond thrice (from 15 to 42). Ranbaxy and Kothari (Madras) are also up four times and spic more than seven times from 5 to 36.

Some shares have lost a little but these are exceptions. National Organic is one of them and so are a number of scrips on the Calcutta stock exchange, namely, Guest Keen Williams, Indian Aluminium and Usha Martin Black.

But by and large the market has done very well and in fact much better than the above figures would indicate if an allowance is made for the bonus shares that most companies have issued. Other prices have not gone up all that much; the wholesale price index is up by less than 100 per cent.

So one cannot really say that it is all due to inflation and the boom doesn't really mean anything. It does mean that the corporate sector - or at least the better companies in that sector - is in pretty good shape and there is no reason why it should not do as well over the next seven years, despite political uncertainties and other hazards. The last seven-year period has not exactly been a game of ping-pong for us.

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